News Round-up: Warning for late paying government contractors, Google moves Pay operations from UK to Ireland, SME fund to be wound down

Here are the week’s main news stories in the world of small business and digital payments:

Late-paying businesses to risk losing out on government contracts

More than 10,000 businesses have been warned by the government that they must pay their suppliers on time or face being prevented from winning further government contracts. Officials from the Cabinet Office have written to the businesses – which include all the government’s current strategic suppliers – to remind them of the new rules on prompt payment, which come into force this autumn. From September, if government contractors are late with supplier payments, they could be prevented from winning public contracts until they address the issue.

Google moves Pay operations from UK to Ireland

Google has moved its online payment service operations for the Pay app from the UK to Ireland amid continuing uncertainty around Brexit. All Google Pay users in the European Economic Area – with the exception of the UK – will now be serviced through the Irish entity. UK-based users will still be processed there. Previously, UK-incorporated Google Payment Limited handled payment processing for all of the EEA. Google Pay is the tech giant’s digital wallet and online payments service, initially launched in 2015 as Android Pay and re-branded as Google Pay; it merged with Google’s other payment services in 2018.

Holland & Barrett’s poor supplier payment practices criticised

Health food chain Holland & Barrett has been publicly criticised for taking 68 days on average to pay its suppliers. The global group has not been adhering to the agreement for 60 percent of its invoices. Senior MPs, along with the Small Business Commission, decided to share their criticism as part of their ambition to prevent other companies behaving in this way. Paul Uppal, small business commissioner, received a complaint from one technology company about an unpaid invoice of £15,000 with Holland & Barrett. In response, Uppal wrote that the company has “a purposeful culture of poor payment practices”. The outstanding invoice mentioned was then paid by Holland & Barrett within 28 days.

Funding Circle plans to wind down SME fund

Alternative finance provider Funding Circle plans to wind down its SME fund and return capital to shareholders. Funding Circle SME Income Fund (FCIF) said it had concluded investors did not want to put more money into new credit assets. It will convene a shareholder meeting to consider the winding down of the company. Funding Circle said it had significantly broadened its mix of funding sources since 2015 and, as a result, FCIF has become a declining part of its funding mix. The company’s share price dropped nine per cent to £3.12, significantly below its October float price of £4.40.

Co-operative Bank plans second bid for RBS competition funding

The Co-operative Bank will apply to the second round of grants from the £775 million RBS competition fund designed to modernise existing services. In February, Metro Bank, Starling and ClearBank were awarded a combined £280 million as part of the scheme to boost competition. Donald Kerr, the Co-operative Bank’s managing director of SME banking, said the bank would defer a number of plans as a result of missing out on the first round, but any funding secured from Pool B of the RBS fund would be used to invest in its digital services. Those digital services are aimed at enabling businesses to check invoices, pay bills and file tax returns through one platform.

Monzo set to double valuation

Digital bank Monzo is set to be valued at nearly £2 billion after securing significant backing in its latest fundraising round. The bank will reportedly close a £100 million funding round, led by a new US investor; this will take its valuation to $2.5 billion (£1.9 billion) to make it the UK’s second-largest fintech startup. Monzo’s board has agreed on the deal, but the firm may have to wait several months to receive the green light from the Prudential Regulation Authority, according to The Sunday Times. In October, the bank secured £85 million in funding, taking its valuation above £1 billion.

Starling adds small-business accounting software to mobile app

Mobile bank Starling has partnered with accounting software provider FreeAgent to help small-business owners cut the time they spend on daily admin and digitise their finances. The partnership will enable Starling’s 40,000 business banking customers to access FreeAgent’s cloud-based software directly through the Marketplace feature of Starling’s mobile app. The service will help them manage the time-consuming administrative and accounting tasks that come with running a small business.

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